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Scaling Social Capital

This essay is based on a keynote address that Stanford Vice Provost for Digital Education Matthew Rascoff gave at the University of Florida Intersections conference on Feb. 20.
What can education do to enhance upward mobility? Matthew Rascoff discusses the potential benefits of social capital. (Photo from Shutterstock)

The idea of “human capital” is at the heart of the American education system. It arose in the 1950s and ’60s as economists were mapping the relationship between education and economic development. They initially studied years of schooling and correlated this with GDP. Later they found that skills offered a more precise way of thinking about the drivers of economic growth. And they constructed the concept of human capital as a store of value in human form. 

Earlier theories viewed labor in opposition to capital. Human capital, which would have sounded like an oxymoron to Karl Marx, suggested that humans and capital were not just compatible — the former was a type of the latter, from an economic perspective. 

The 20th century education system was optimized to increase human capital. Skills were placed at the center of educational attainment goals. If skills were the source of humans’ economic value then developing skills could be considered an investment for companies and countries. In the “race between education and technology” to prevent technological unemployment, new skills would allow humans to keep up and make productive use of machines. Assessment systems sorted people and tracked their skills in numeracy and literacy. International benchmarks, such as PISA and TIMMS, compared assessment performance across countries — so now we were racing not just with technology, but with other nations as well.

When digital learning arose later in the 20th century, it was applied to maximize skills for learners. Researchers developed personalized learning systems to differentiate instruction at the individual student level, delivering “just the right information to the right learner at the right time.” Starting with ELIZA, developed at MIT in the 1960s, followed by advances with “cognitive tutors” at Carnegie Mellon in the late 1990s, personalized learning is based on an analogy to human tutoring: We know human tutoring is effective. But it’s too expensive to provide to every student. So if we can approximate human tutoring with technology, perhaps we can get some of its benefits at a reasonable cost. 

This is now the thesis behind dozens of ed tech startups that are trying to build AI tutor chatbots. But the AI moment is revealing three interrelated fault lines in the existing system of education-for-human-capital. 

My first concerns are psychological. We are facing an epidemic of loneliness and isolation. A surgeon general report from 2023 said that “Humans are wired for social connection, but we’ve become more isolated over time,” with profound implications for our health and communities. Colleges and universities have experienced an extreme version of those implications. 

They have added more therapists, but have been unable to keep up with demand. It’s certainly good that therapeutic services are available to students but they are just treating the symptoms of a larger malady. When as many as one third of students are in professional care, we have to recognize that there is a more fundamental public health challenge of prevention.

When we treat students as individual actors in a competition against their peers, it sets up a zero sum game that harms learning communities. This is unhealthy even for the winners of the game, who know their successes came at the expense of others, and are often based on luck. The results are anxiety and imposter syndrome for the winners and exclusion and resentment for everyone else.

The scholar Daniel Markovits has called this the “meritocracy trap” and makes the case that it’s at the heart of the mental health crisis on campus. But maybe the issue precedes meritocracy. Maybe it is really about how educational individualism can veer into educational isolationism. And how a theory of human capital can become a competitive game of human capitalism. Either way, individualized learning, based on maximizing my skills and abilities, so I can get ahead, comes at a steep psychological price.

Now I want to turn to the economic costs of education for human capital. Raj Chetty calls this chart “the fading American dream.” The generation born around 1980 will be the first in American history that does not out-earn its parents in real terms. At the same time we are facing levels of economic stratification and inequality on par with the Gilded Age. Given all the investments we’ve made in skills, how is this possible? 

Line graph titled "The Fading American Dream" by economist Raj Chetty and colleagues showing how the percentage of children who can expect to earn more than their parents is declining steeply.

We spend approximately $186,000 on each student through their K-12 education, and tens or hundreds of thousands more on those fortunate enough to attend college and graduate school. This is invested through a combination of public subsidies, savings, and debt. Are those numbers the result of Baumol’s cost disease, which predicts that costs will always rise faster in labor intensive fields, such as education, where productivity gains are harder to come by, compared to other industries? Are humans simply unable to keep up in the race between education and technology? Or is there something else going on? 

Let me leave that question for a moment and turn our attention to the political costs of human capital. 

We are living in an age of political polarization, driven by a media culture that is splintering information into ideological echo chambers. Each of us now spends two more hours on screens per day than we did a generation ago. All screens, from big to small. Classroom time is finite, a scarce resource. Every moment a child spends with headphones on in front of a screen is a moment they are not listening to their classmates or teacher. Learning how to listen.

To be clear, I’m not blaming the education system, and certainly not the online education system, for these problems. Education is part of a larger human capital movement that directed the goals. But I would argue that education has not done enough to offer an alternative vision that goes beyond individuals and their skills, to address whole learners and communities. Our job as educators isn’t simply to give learners what they want and are willing to pay for. The stakes are higher than that. What we do shapes citizens, our economy, and our country.

Even economists of human capital are starting to recognize this. David Deming and Mikko Silliman are proposing to redefine human capital:

“First, prior work mostly assumes that human capital is one-dimensional and can be measured by education or test scores alone.

“Second, human capital is typically modeled … with workers being treated as factors of production, just like physical capital. We argue for a new approach that treats workers as agents who decide how to allocate their labor over job tasks.

“Traditional cognitive skills make workers more productive in any task, while higher-order skills govern workers’ choices of which tasks to perform and whether to work alone or in a team.”

Their redefinition is motivated by a reckoning with the impact of AI on productivity and human work. And there needs to be a similar redefinition of the goals of higher education, based on an awareness of the limitations of the human capital model in the age of AI. 

* * *

In the next part of this essay I argue that social capital should be the primary goal of digital education. For each of the concerns I raised about human capital, social capital offers an alternative. 

Social capital is an indicator of the health of human networks and communities. Yet paradoxically the health benefits for us as individuals are immense. 

“Your chances of dying in the next year are cut in half by joining one group.” That is from the 2024 documentary “Join or Die,” about sociologist Robert Putnam, author of the classic work, Bowling Alone

Shouldn’t education feel like joining something? Shouldn’t enrolling at a university, including as an online student, confer at least the same, if not more, benefits as joining a bowling league? Don’t we want that for our students? And if we’re not confident we’re conferring those benefits, might it be worth rethinking the social capital component of our programs?

A chart showing which universities and colleges have the most students who go on to found "unicorns." The top three are Stanford, MIT, and Harvard.

Have you ever wondered why Stanford produces so many startups? It’s not because we teach different skills. It’s about social capital — the dense networks that help founders find co-founders, and then plug into Silicon Valley, where they can raise venture capital and get advice.

The Team Formation Hub is one of the secrets of entrepreneurship at Stanford. It helps engineering students find MBAs to co-found companies, and vice versa. Is this an online learning platform? Not as conventionally defined. Instead, it’s a social capital platform that helps students build complementary teams.

Social capital works for finding jobs as well as co-founders. 

In his classic paper “The Strength of Weak Ties,” the Stanford sociologist Mark Granovetter showed that people get jobs through social capital. More recently Raj Chetty showed that friendships across socioeconomic strata drive innovation and social mobility. Social capital helps to make Stanford among the most powerful social mobility escalators for low-income students. This is probably the chart that makes me proudest to work there.

A chart from economist Raj Chetty and colleagues listing the universities and colleges that are most successful in enabling students from the lowest-income quintile to move to the top quintile later in life. The top five are UC Berkeley, Columbia University, MIT, Stanford, and Swarthmore.

* * *

Here is a quote from Dave Isay, founder of StoryCorps and One Small Step:

"Around 2016, I started thinking about toxic polarization in the U.S. and becoming concerned about it. Not the fact that we disagree with each other — arguing is healthy and great — but if we can’t see each other as human beings anymore…

"[Listening] is, I guess, countercultural. But I don't think we are in the minority….Our only agenda is that all of our stories and lives matter equally and infinitely."

These insights led Isay to found One Small Step as a spinout from StoryCorps.

Is this an online learning platform? Is it an educational institution? Not as conventionally defined. It’s a nonprofit that is helping to overcome polarization by encouraging listening and understanding. This is personal, not personalized, learning. Maybe there’s a model here to help bridge our society’s divides.

* * *

Higher education can be thought of as a bundle of skills and knowledge, mindsets, intellectual exploration, athletics, and of course social capital. In order to scale higher education online we had to unbundle it. Over the past two decades of online growth I believe that unbundling over-indexed on skills and under-indexed on social capital. 

One reason this happened is because content and assessments were the parts of education that were relatively easy to scale with the technological limitations of the early 2000s, when online learning began to take off. And of course skills were what the human capital system demanded. So as it unbundled college, online education became a more extreme version of the skills-centered human capital approach.

Today there are two factors that are motivating change in the way we think about online learning. 

First, the value of skills and knowledge in the labor market is evolving. It’s not just that some skills are declining and others rising. What’s happening now is a more fundamental recalibration that calls into question how we think about human productivity and the creation of value. That is what Deming and Sillliman were getting at.

And second, it’s now possible to scale social capital-driven learning models that strengthen human connections, understanding, and community, alongside skills. 

* * *

In my last section I want to talk about how to scale social capital.

Screen shot of a board and menu used to play online chess.

My models are games like World of Warcraft or online chess, which offer experiences that are simultaneously synchronous and asynchronous. You can log in and find people to play with, live. I went to Chess.com late last night and there were 124,000 people playing.

But players still get the flexibility of an asynchronous experience — since you can play in any time zone, at any hour of the day. You can find community and build teams. You can learn to communicate and collaborate. This sounds a lot like the “joining” that Robert Putnam was talking about.

Now imagine online education could combine the flexibility of asynchronous learning and the social capital benefits of shared synchronous experiences? The online learning innovator Paul Freedman presented this challenge when he spoke at the Stanford GSB class I co-teach several years ago, and it’s stayed with me. 

To achieve this requires scale. You need thousands of people logging into the same course in order to guarantee that they can find a live discussion or section.

And that is what Prof. Chris Piech has done with Code in Place, a free online course from Stanford that was launched during the pandemic — thus the name — with the explicit goal of reducing isolation and increasing human connection. 

Map of the world showing how learners enrolled in the online programming course Code in Place can be found on every continent except Antartica.

Code in Place is an online programming course based on CS106A, which is among the most popular courses at Stanford and the gateway to the CS major. 

About 12,000 students around the world take Code in Place each spring. They do so in sections of 10 students led by a section leader. So we recruit and support roughly 1,200 volunteer section leaders. A cohort of 20 section leaders is then led by a teaching leader. 

It’s a different approach to scale that balances the benefits of a human teacher and a cohort with the benefits of geographic and temporal flexibility. I call this the meso scale of learning, in between the micro scale of face to face on campus, and the mega scale of MOOCs.

There are five characteristics of Code in Place that I want to mention:

  • It mixes asynchronous and synchronous components with weekly live discussion sections offered in every time zone.
  • It is led by human section leaders, supporting small groups of learners. Section leaders use AI tools to enhance their ability to help learners, yielding better learning outcomes than a fully self-paced, self-directed online course.
  • It draws on our existing learning communities of students and alumni volunteers, some of whom serve as section leaders, and extends their impact through technology.
  • Because it’s happening at a research university like Stanford, Chris and his colleagues run several randomized controlled trials inside Code in Place each year, and publish the results.

But what’s most remarkable about Code in Place in particular and this model in general is that it gets better with scale. 

There are network effects. The more people who are part of a course, the more likely they are to find someone to connect with on their schedule. Bigger is better! 

That subverts a common higher education bias against scale. 

If you are intrigued, I encourage you to sign up to take Code in Place. The next run of the course starts on April 21st and applications are due April 9th. Even if you don't, I hope this model inspires you, as it does for me. Perhaps it will help us reimagine online learning to scale social capital as a psychological, economic, and political imperative.


Matthew Rascoff is vice provost for digital education at Stanford.

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